Liability Insurance

Features & Benefits of Liability Insurance

Here are some of the features and benefits of a Liability insurance policy:

• Provides financial coverage to individuals and companies.
• You can get protection for property damage.
• Bodily injury of third person and personal injuries coverage.
• Provides coverage for legal liabilities towards third-party.
• This insurance is often required for product manufacturers, automotive insurance policies or whoever practices law or medicine.
• Intentional damages, criminal prosecution and contractual liabilities are not covered.
• Commercial liability, personal liability or workers’ compensation are different types of liability insurance.

Liability Insurance: Inclusions

The liability insurance policy provides coverage for the following:

• The liability insurance policy provides coverage against lawsuits filed against the insured.
• It also provides coverage for the expenses coming out of investigations and settlements.
• Financial coverage for the fees of investigating officer or lawyer you have to hire after being sued by a third party.
• Medical expenses caused due to an accident on the insured person’s premises that leads to a third-party claim are covered.
• Medical expenses caused due to an accident from any of the insured person’s products, promotional advertisements or during official operations are covered.
• Damaged caused to the third party while visiting the office of the insured person is also covered.

Liability Insurance: Exclusions

The liability insurance does not provide coverage for the expenses arising out of the following:

• Willful misconduct and intentional damages are not covered
• Any damage or loss caused due to natural calamity such as volcanic eruption, earth-tremor, typhoons, floods, storms or tornados is not covered
• Loss in the market and goodwill are not covered
• Libel and slander are not covered
• Expenses coming out of Wrongful eviction, defamation and false arrest are not covered
• Infringement of patent, copyright, trademark, trade name, etc. are not covered.
• Fines and penalties are not covered.
• Transportation of dangerous substances and materials is not covered unless opting for separate coverage.
• Loss or damage caused due to war, nuclear war or acts of God are not covered.

Types of Liability Insurance in India

There are different types of policies that are available in India. Some of the most common liability cover policies are:

Public Liability Cover

Public liability insurance is a type of policy is designed for those industries/companies that have a lot of interaction with the general public. It is suggested to buy this insurance policy to secure you from unnecessary financial risks and legal liabilities. Retail shops, shopping malls, clubs, theatres, and all those catering to the general public are advised to take this variant of liability policy.

Professional Indemnity Insurance

PI insurance or professional liability insurance is a type of liability policy. It is designed for professionals such as medical practitioners, architects, engineers, lawyers and chartered accountants. Policy provides coverage to these professionals to protect their business interests against legal claims for professional neglect, error, or omissions.

D&O Insurance

Directors and officers liability insurance is the type of policy that provides coverage to the directors and officers of big organisations. It provides coverage in case of any legal cost arises against them due to the following reasons:

• Unlawful acts
• Releasing confidential information
• Conflict of interest
• Failure to maintain the property
• Gross negligence

Errors & Omission Insurance

Errors and Omission insurance is a type of liability insurance that provides coverage against lawsuits that can arise out of negligent professional service as well as failure to perform professional duty. This insurance policy is mostly purchased by lawyers, engineers, architects or any other business that provides any kind of service to a client.

Employer Liability

This policy is for employers who want to cover the liabilities of employees who may get injured because of the job. Generally, this insurance policy is known as Business Liability Insurance.

Product Liability Insurance

This policy is one of the most required policies for companies that are related to the production of tobacco, chemical industry, food, medical products, recreational products, etc.

Third-Party Liability

This policy is suitable for small industries or individuals who want coverage for damages or losses caused by them to a third party. In third-party insurance, the insured is the first party, the insurance provider is the second party. Apart from this, the injured or the company/person who is making claim against the insured is referred to as a third party.

Who Should Buy Liability Insurance?

The policy is designed for companies or individuals who are held legally liable for injuries or other issues. This type of insurance policy is most suitable for doctors, hospitals, business owners and likewise.

For example, if a product manufacturing company sells a product that causes damage to other people or products, then this manufacturing company may be sued for the loss or damages caused by its product. However, if this manufacturing company is procuring a liability cover plan, then the loss or legal costs will be covered by the insurer.

Liability insurance is covered under general insurance policies. The scope of liability insurance in India is defined by the Public Liability Act of 1991.

How is the Liability Insurance Premium Decided?

The insurance company considers different factors before deciding the premium amount for a liability insurance policy taken by an individual or a company. The first and foremost factor that affects the premium of a policy is the amount of risk a product of a company can cause. The higher the risk, the higher would be the premium amount to be paid.

Other factors that are being considered by an insurance company include are:

• The claim history of the insured
• The approach of the company toward the risk
• The business record of the company

How to Raise Claim Under Liability Insurance?

Follow general steps below to raise claim under liability insurance:

• Read the policy documents for coverage benefits that are permissible to claim, and how the claim needs to be filed
• Intimate the insurance provider over a call or email or by visiting the nearest branch office
• In case of theft or death, it is recommended to report at the nearest police station or the concerned authorities. This report will be required by the insurance company in addition to the claim form and the documents
• In some cases, evidence is also required
• The insurer will appoint a supervisor to examine the site of the incident or the damage caused to create a report and decide the compensation accordingly
• The insurer will update the claim status or one can check the claim status online

How to Renew Liability Insurance Policy?

Follow the steps given below to renew the liability insurance policy online:

Step 1: Access your insurance account using your policy number.

Step 2: Once you enter the account, review the insurance plan.

Step 3: You can add or remove any add-on if you want.

Step 4: The addition and removal of any add-on to the policy will reflect in the final premium amount of the policy.

Step 5: Now you can make the payment using your debit or credit cards, UPI, or net banking.

Step 6: Once you make the payment, the insurer will send the updated policy documents to your registered email ID and a hard copy to your registered home address.

*Make sure to renew your liability insurance policy on time to avoid lapsing.

Why Should You Buy Liability Insurance?

Liability insurance policies cover the insured against any claims arising out of bodily injuries and damages to the property of any person. Besides covering the legal costs involved, liability insurance provides coverage for payouts that the insured is legally liable to pay.

Business owners, industrial and non-industrial operators, product manufacturers, cab owners, hotels and doctors, can be saved from being sued. In case the compensation and legal settlement is done for loss/damages/injuries caused to a third party or person. A liability insurance policy can also be purchased to protect employees from risks arising during business operations.